The Millennial EconomyFindings from a new EY & EIG National Survey of Millennials

Millennials are the future of the U.S. economy. But when it comes to their future, and the future of the country, they are a deeply pessimistic generation. EY and EIG conducted a new national public opinion survey of 1,200 Millennials to gauge their views on a variety of issues related to the economy at all levels—personal, local, and national—and the challenges they face almost seven years into the recovery from the Great Recession. The results outlined below paint a complex picture of a generation convinced the economy is failing them, one that is willing to work hard to better their lot, and one that is very uncertain about what comes next.

We Asked Millennials About the Economy: Here Are the Top 10 Takeaways

Millennials are often painted as lazy and entitled, but the stereotype doesn’t hold up upon closer scrutiny. Millennials value education and hard work, and they’re willing to make sacrifices to get ahead. The Great Recession shaped this generation—18% faced unemployment in 2010, two-­thirds have at least one source of long­-term debt, and their wages have fallen over the past five years—and these after effects still reverberate strongly throughout Millennial life. Millennials may perceive their lot as unfair not out of entitlement, but because they feel like they did their part but haven’t seen the expected benefits.

Our survey found:

Millennials invested in human capital and are willing to work hard to get ahead

88 percent of Millennials recognize that hard work is an important factor to get ahead in life.

64 percent would move to a different part of the country for a better job or access to better opportunities.

63 percent would add an hour to their commute for a better job.

Coming of age during a historic economic downturn has severely impacted Millennial life

30 percent of respondents live with their parents, which rises to 40 percent for single respondents.

Nearly one­-third believe their local community is still in a recession.

Stress levels run high for Millennials

78 percent of Millennials are worried about having good-­paying job opportunities.

74 percent are worried they won’t be able to pay their healthcare bills if they get sick.

79 percent are worried they will not have enough money to live on when they retire.

Millennials will be the most educated generation in U.S. history, but they are not convinced that higher education will provide them the same leg-­up on the path to prosperity that it guaranteed earlier generations. Their ambivalence stems in part from the inexorable rise in the cost of college, which has changed its value proposition. Instead of opening doors, many Millennials feel that student debt has boxed them in. In fact, between 2004 and 2014, there was an 89 percent increase in the number of student borrowers, and the average balance per borrower grew by 77 percent.

Our survey found:

Millennials feel ambivalent about higher education and question whether the labor market will hold up its end of the bargain

Two-­thirds of Millennials believe that having a great education is important to getting ahead in life.

But less than half (49 percent) believe that, personally, the benefits of a college education will be worth the cost.

Millennials’ skepticism isn’t unfounded given the risk they’ve taken on

52 percent of Millennial respondents have or will have taken on student loan debt.

Instead of feeling empowered through education, a significant share of millennials feel boxed in because of student loans

43 percent of Millennials believe that student debt has limited career options.

Millennials are stuck in a Catch­22: the need for a college degree has never been greater but the cost of obtaining one has never been higher and the benefits relative to prior generations never lower. As the earnings gap between college and non­-college graduates grows steadily wider, the relative value of a college degree rises. At the same time, the absolute value of a college degree has fallen for Millennials—median earnings are lower for Millennial college graduates than they were for Generation X ones, even as the cost has skyrocketed. Wages for the entire generation have stagnated in spite of rising college attainment rates. No generation has entered the labor market further behind thanks to student loans or with dimmer prospects thanks to falling wages.

Our survey found:

The earnings gap between high school and college graduates has never been wider, but millennials are getting lower absolute returns and incurring far higher costs for their degrees than prior generations

59 percent of Millennials worry about paying back their student loans.

35 percent of Millennials claim to be making just enough money to cover their expenses

30 percent of Millennials are not making enough to even keep up with expenses.

Few millennials feel financially secure

Only 6 percent of Millennials feel they are making a lot more than required to cover basic needs. For Millennial women, the figure is only 3 percent.

63 percent would have difficulty covering an unexpected $500 expense.

44 percent would dedicate $5,000 in lottery winnings to paying off bills and loans, signaling a struggle to launch, save, and invest.

True to reputation, Millennials are skeptical of the establishment. While not as overtly iconoclastic as some of their parents might have been at similar ages, Millennials put very little confidence in established institutions—perhaps because established institutions have yet to deliver for them. The establishment aside, Millennials remain fiercely patriotic and supportive of a leading role for the United States in the world.

Our survey found:

Millennials express low levels of confidence in nearly every American institution

Corporate America, governors, and the news media inspire the lowest levels of confidence, with only one-­fifth of Millennials placing a lot or a great deal of stock in them.

Silicon Valley, for its part, ranks near organized religion, mayors, and the criminal justice system with roughly one-­quarter of Millennials expressing a great deal of confidence in it.

Colleges and universities and the military are the only institutions of the 13 polled to garner the confidence of the majority of Millennials

Support for these institutions holds across all demographics.

Millennials remain overwhelmingly patriotic

84 percent agree that they are proud to be an American.

Men are more patriotic than women by a 7 point margin.

Hispanic men are the most patriotic of all demographics with 91 percent stating that they are proud to be an American.

Millennials are the most diverse generation in U.S. history, with over 44 percent belonging to a minority group according to the latest Census data . Their diversity of perspective and experiences are reflected in the confidence they place in American institutions. Skepticism reigns across all demographics, but men tend to buy into established institutions more than women and Hispanics tend to be more optimistic than blacks and whites. Black women, for their part, place the least confidence in the establishment but tend not to let that mistrust cloud their relative optimism about the direction of the country.

Our survey found:

Despite low levels of confidence in American institutions overall, Millennials hold a wide range of opinions

Men have greater confidence in U.S institutions than women with, on average, 34 percent of men expressing confidence in the institutions polled compared to only 25 percent of women.

Men had more confidence than women in all 13 institutions polled.

The gender gap is largest for Silicon Valley with a 22 point spread.

Black women have the lowest average confidence in the 13 institutions polled, with the least confidence in Silicon Valley and mayors.

White men have less confidence in most institutions than black or hispanic men.

Blacks reserve their lowest levels of confidence for Silicon Valley and Hispanics for governors and Corporate America.

Millennial men remain more optimistic than Millennial women

Men are nearly twice as likely to believe that the country is headed in the right direction (33 percent) as women (17 percent), although the vast majority of both genders still fear the country is headed on the wrong track.

Hispanic men and black women are the most optimistic group within each gender, with 41 percent of the former and 27 percent of the latter believing the country is headed in the right direction.

Millennials’ stunted launch into a recession-­plagued economy has clouded expectations about their future prosperity. Millennials hold out little hope that their standard of living will rise above their parents’. Blacks and Hispanics buck the trend somewhat, and men remain more optimistic than women. Nevertheless, Millennials are a generation slowly coming to terms with the reality that they may be the first in modern times to experience backsliding living standards.

Our survey found:

Millennials have had difficulty establishing their own independence and are pessimistic that they will be more prosperous than their parents

A majority (54 percent) of Millennials believe their standard of living will not be better than their parents’.

Men are more optimistic about their prospects than women, with 41 percent believing their standard of living will rise above their parents’ (compared to 34 percent for women)

Minorities are much more optimistic than whites about their future prospects

Only 36 percent of white men and 27 percent of white women believe they’ll be better off than their parents.

A majority of hispanic men (52 percent) and black women (54 percent) believe their standard of living will surpass their parents’.

Startup culture is a defining characteristic of the Millennial age in the minds of many Americans, but the reality is different. Millennials are in fact the least entrepreneurial generation in recent history, according to a Small Business Administration report. The gap between perception and reality may be explained by aspirations, however: Millennials admire entrepreneurs and would seriously consider entrepreneurship for themselves—if only they had the financial means.

Our survey found:

Few Millennials may be starting businesses of their own, but the generation deeply admires entrepreneurs

Conditioned and also shaken by the economic conditions when they entered the job market, Millennials are risk­-averse and even conservative in their career choices. They intuitively know that risk­-taking and a willingness to fail are important for advancing in life, but Millennials view sticking with one company a safer bet to salary growth than switching jobs (in reality the opposite is true) or starting a business. Millennial black women are the only demographic to buck the trend and see entrepreneurship as the surest path to prosperity, even though women and minorities face far bigger challenges than white men in getting the capital they need to get these businesses off of the ground.

Our survey found:

Millennials prefer the risk-­averse path

71 percent of Millennials recognize that taking risks and being willing to fail are important to getting ahead in life.

Nevertheless, a large plurality (44 percent) of Millennials still believe the best way to advance their career is to climb the corporate ladder.

Even though 62 percent of Millennials have considered starting a business and 51 percent know someone who started or worked for a startup, only 22 percent believe entrepreneurship is the best way to advance their career.

Black women: The true face of Millennial entrepreneurship?

Black women are the only Millennial demographic in which a plurality (39 percent) believe that starting their own business is best way to get ahead.

71 percent of black women have considered starting their own business, making them the most entrepreneurially-­inclined of the millennial cohort. Their inclination to chart an independent path may stem from their lack of confidence in established institutions, too.

How to win the coveted vote of a supposedly fickle and hard to decipher generation? Evidence suggests that economic uncertainty greatly influences Millennials’ political priorities. It comes as little surprise that Millennials want more public investment in education. More surprising is how large retirement already looms in the Millennial psyche: Social Security and Medicare are their second biggest priority for federal funding, suggesting that their economic anxiety runs deep and far into the future. Many Millennials want an investment and growth strategy to improve their lot. And true to reputation, their political preferences often don’t fall down conventional party lines.

Our survey found:

Millennials are looking to politicians to alleviate their financial insecurity

64 percent of Millennials believe public education should be a top priority for federal tax dollars, a consensus that holds across party lines.

Social Security and Medicare were the second-­biggest priority, reflecting Millennials’ concern about retirement. 74 percent of Millennials are worried that Social Security won’t be there when they retire.

Millennials appear to take a pragmatic approach to federal income taxes. Our survey found that a majority of Millennials were comfortable with their own tax burden. However, their stances will evolve much as prior generations’ have: Older and higher income Millennials are much more likely to feel they pay too much in income taxes compared to younger and lower income ones. And while Millennials have a strong sense of fairness, believing that the burden of taxation falls too heavily on the poor and Middle Class and too lightly on the rich, opinions largely break along the expected political lines.

77 percent of respondents filed a tax return.

53 percent of Millennials who filed a tax return believe the amount they paid was about right.

The older and wealthier Millennials get, the more they feel their tax burden increases:

25 percent of 18-21 year olds feel they pay too much in taxes, rising to 39 percent by ages 30-34.

30 percent of those making under $20,000 a year felt they paid too much in taxes, rising to 37 percent of those who made over $100,000 a year.

Millennials may feel relatively comfortable with their own tax burden, but they remain concerned about fairness in the tax system generally:

51 percent of Millennials believe that the Middle Class pays too much in taxes.

The spread between Democrats and Republicans is 6 points, pointing to a near consensus.

56 percent believe that lower income Americans pay too much in taxes.

The spread between Democrats and Republicans is 26 points, with Republicans more comfortable with present tax rates at the bottom of the distribution.

Fully 70 percent believe that the wealthy pay too little in taxes.

The spread between Democrats and Republicans is 33 points, with Democrats more likely to believe the wealthy pay too little.

The Millennial Economy National Survey Findings

How Do You Align with Millennials?

How personally worried are you about having good­-paying job opportunities in the future?

A lot 50% Some 28% Not very much 12% Not at all 7%

Do you think the benefit of your college education will be worth the financial costs?

Yes 49% No 32% Did not go to college 12%

Which of the following best describes your personal financial situation?

I’m not making enough money to cover my expenses 30% I’m making just enough money to cover my expenses 35% I’m making a little more money than needed to cover my expenses 24% I’m making a lot more money than needed to cover my expenses 6%

Survey Infographics

Millennials and the Economy Event

Methodology

On behalf of EY and the Economic Innovation Group, Public Opinion Strategies and GBA Strategies conducted a survey of 1,200 18-34 year olds nationwide. Eight hundred and forty respondents were contacted online and 360 were contacted via cell phone. The survey was conducted June 15-20, 2016, and has a margin of error of + 2.83%.